The biggest news of the day is the looming deadline for American and Canadian officials to agree on a new trade deal to replace the North American Free Trade Agreement (NAFTA).

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The administration of American president Donald Trump has forced the Canadian government into an impossible position. With the leverage of a separate trade deal with Mexico, a tight schedule, and the threat of debilitating tariffs on Canadian car parts, Donald Trump can coerce Canadian officials to agree to a disadvantageous deal.

Canada has a lot to lose.

As meetings persist in Washington, one issue in particular is likely to stall negotiations: dairy.

Canada has strong measures in place to protect domestic dairy producers. The dairy supply chain management system gives favour to products from Canada and excludes American competitors from the Canadian market.

Trump has long targeted this single provision. Now, it seems the American trade representative is unwilling to compromise on the issue.

That presents a lose-lose scenario for Canada. Either officials surrender the Canadian dairy market, which would hurt thousands of farmers and be politically damning for the Trudeau government, or they abandon a deal with the country's largest trade partner.

Parliament is also at stake. Either move puts Trudeau in a weak position in the run-up to federal elections next year. 

Quebec, with more dairy farms than any other province, also stands to lose the most to a compromise on the issue. If federal officials sacrifice dairy in favour of larger, national economic interests, most notably the car-manufacturing industry in Ontario, Quebec residents and politicians will be rightfully angered.

That move could fuel the sovereignty movement, which has been largely silent in this provincial election cycle.

Quebec elects a new National Assembly on October 1st. If a sovereignist or conservative government wins a majority, that will spell trouble for federal Liberals.

More announcements about a possible deal, or lack thereof, are forthcoming.

Stay tuned.

Source


 

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